“Build more houses” is not the answer to the housing shortage. Here are some alternatives…
After air, food and water, the most fundamental human requirement is shelter. In Britain in the 21st century and especially so in its capital city London, the provision of housing has become perverted.
Housing is no longer a case of meeting a human need. It has become a case of satisfying the greed of a tiny minority of capitalist speculators who see housing only in terms of the profit that it can make for them. It has become increasingly disconnected from the actual purpose or “use value” of a house as means of shelter.
Like a rapidly spreading cancer, this perversion is now affecting other types of property, after a supposedly “minor” relaxation in a planning regulation allowed the change of use of offices, industrial units and warehouses into housing. A growing number of businesses which provided employment are being turfed out, and this unregulated development is now eroding employment.
Across the health service and local government, land which is held as a public asset is also being identified for “disposal”. The accrued wealth of our forebears who fought for a health service and the amenities provided by local government – civic society – is being disposed of in the name of finding a bit of cash to keep a service going and the land is handed over to the speculators.
The Housing Minister, Brandon Lewis, even told councils recently that they can ignore the government’s own requirement for them to adopt local plans that set out how they would meet housing need.
The working population cannot afford to buy homes or to pay astronomical rents. According to all the Westminster parties the answer is to build more “affordable” houses but as the prices are not affordable, all this would do is throw yet more petrol on the fire.
The banks aren’t willing to lend on mortgages and “affordability” is not on their agenda. Central banks around the world are supporting property price rises to stave off another crisis in their profits. So the real population of London – the people who live and work here – need to take the matter in hand. But where to start?
Demand 1. Leave the European Union, manage population and house the existing population
London occupies 1,600 square kilometres, less than 1 per cent of the total area of Britain. At mid-2012 it had a population of 8.3 million according to the Office of National Statistics, 13 per cent of the total. These are the official statistics; the actual population could be considerably higher.
The European Union policy of free movement of labour, now subtly renamed free movement of people, means that there can be no accurate prediction of current or future population.
Some of the signs of housing overcrowding are visible, with areas of “beds in sheds” or shanty towns in several parts of London. Other signs are less visible – officially 17.1 per cent of households in London have more than 1.5 people per bedroom, twice the proportion of England and Wales as a whole.
Given that in some areas of central London such as Mayfair, large swathes of property are not functioning as homes and are unoccupied (except by security guards) the real levels of overcrowding are disguised by any reference to the average.
According to politicians and estate agents, the answer to this population growth is to build more houses. For Savills, the global property company, the answer is to build 50,000 homes a year – the equivalent of 18 Olympic Villages.
But Savills’ own research shows that as the income of 70 per cent of London households is less than £50,000 a year, the vast majority of these houses would need to be available at prices far below current market rates.
And since 2008, house builders have focused on the wealthier, credit-worthy buyers. A disproportionate amount of stock is being delivered at the “new prime” levels of between £1 million and £2 million.
A generic call to “build new houses” is a speculators' charter and can solve nothing. Unless we leave the EU, London will become ever more crowded and unable to house the workers needed to serve the city.
Demand 2. No more land sales to non-UK residents
In the year to June 2013 Savills estimate that 70 per cent of new-build properties bought in Central London went to foreign investors, while 30 per cent of the capital’s homes “worth” more than £1 million were bought by non-UK residents. The figure to June 2014 is expected to be much higher.
At the moment these non-UK residents do not even pay capital gains tax on profits when they sell. In December 2013 a capital gains tax on future gains made by non-residents who sell residential property in Britain was announced, but this will not apply to properties bought before April 2015. This long run-in period has contributed to the speculator frenzy.
But capital gains tax will be not be much of a deterrent to speculators. What is really needed is prohibition of sales to non-UK residents.
Singapore, for example, doesn’t allow foreign individuals or foreign companies and societies to purchase vacant land or landed residential property, such as bungalows, terraced houses and semi-detached houses. Much closer to home, Switzerland regulates property and land sales to non-Swiss purchasers very strictly.
We need to legislate to prevent the sale of British land and residential property to overseas buyers. Tiny measures such as tweaking capital gains tax will not alter anything.
Demand 3. Stop council house sales
There are about 400,000 council dwellings in the Greater London area, accommodating around one in eight households and accounting for most of social housing of all kinds. That's high compared with the rest of the country, yet the Smith Institute think tank calculates that 290,000 council homes in London have been lost to the capital since Right to Buy in 1980.
Its housing expert told a London Assembly committee in 2013 that simply replacing the lost council dwellings would, at current rates of investment, take 72 years and cost £45 billion. Yet there are 380,000 people on London’s local authority waiting lists, with little chance of this reducing any time soon.
In four years, nationally, the number of homeless households on councils’ books has risen by more than a quarter. At the same time council funding for single homeless people has fallen by 26 per cent.
In April 2012, the government increased the maximum cash discount for sale of council houses to £75,000 across England, rising to £100,000 in March 2013 for tenants in London. As evidence has emerged that many of the tenants who have applied to buy council houses in London are on housing benefit, it is increasingly clear that speculators are using tenants as a channel to buy, doing a deal and splitting the difference.
In 2013 the GMB union looked into who owns former council houses and found that 40 per cent are now owned by buy-to-let landlords. The union discovered that Charles Gow, the son of Thatcher’s housing Minister Ian Gow who planned the right to buy scheme, and his wife own 40 properties in just one South London housing estate.
Councils need to be able to reverse this loss in housing stock and build for their own residents. Building more houses without control on speculation will lead to further speculation. But with controls in place councils are in the best position to meet the needs of their residents.
We need to wrest control of the assets we have locally to bring sanity back to housing, planning and land development.
Demand 4. Control rents and fight for pay
More than a quarter of Londoners now rent privately, and the housing charity Shelter has pointed out that it costs on average £900 a year more to rent privately than pay a mortgage for an equivalent property. Those rents are rising at twice the rate of earnings or more.
Insecure short-term tenancies and poor housing are the norm in the private sector with tenants often being summarily evicted if they complain about their conditions.
Fully 95 per cent of the government’s housing budget is now spent on housing benefits: each year, £9 billion of that goes straight into the pockets of private landlords. One-third of MPs (from various parties) are also buy-to-let landlords so don’t look to Westminster for a solution.
To make matters worse, anyone can set themselves up as a letting agent and extract more rent than the landlord is actually charging, and also demand extortionate fees for finding properties.
‘One-third of MPs (from various parties) are also buy-to-let landlords.’
Taking the lead from Newham, other councils in London, such as Enfield, are now setting up compulsory registers of private landlords as a means of trying to get some control over the anarchy of the private rented sector, with compulsory inspection of rented properties.
The fact that over half of all people who now claim housing benefit are actually in work shows the extent of the attack on wages, while housing costs rocket. Benefit claimants are not the work-shy idlers portrayed in the tabloid press, but working people who need top ups to their wages to pay their rent.
Further attacks on benefits in the form of Universal Credit will widen this gap. But we need to be clear that the answer is a fight for pay, not a “fairer” benefit system.
Once upon a time in relatively recent history there was something called tenants’ rights and a cap on rents. Any suggestion from any quarter to put a cap on rent levels is met by threats from landlords to sell their property. In the current climate they probably would – to overseas buyers. This illustrates the importance of putting the demand for a ban on sales to non-UK residents in conjunction with a demand for a cap on rents.
Demand 5. Reinstate regulations to ensure buildings intended for employment purposes retain that designation
It is now eighteen months since a supposedly “temporary” and “minor” relaxation of a planning regulation has allowed offices to become houses. In arguing for the rule change the government predicted that there would be about 190 applications a year across the country.
In a freedom of information request Planning magazine has established that in one year, London alone processed over 2,000 applications.
Many of these schemes involve the loss of occupied offices in town centres and significant loss of employment for Londoners. Birmingham, Bristol, Leeds, Liverpool, Newcastle, Nottingham, Manchester and Sheffield have received 269 applications in the same period.
Even one application can be devastating to local employment. In the outer London borough of Barnet more than 100 small businesses and charities were given four to six weeks’ notice to leave their premises in the 14-storey Premier House – by developers who plan to turn it into 112 flats.
The local Conservative council said councillors had no choice but to approve the conversion because of the new planning rules. They said the council would not otherwise have allowed the eviction of a full office block.
‘Many of London’s workforce cannot afford to live in the city.’
The London Borough of Croydon is facing a similar pressure. Its Director of Planning, Mike Kiely, has reported, “We’ve had some fairly major occupiers that have told us they are being forced out. These are blue chip companies. They don’t want to leave Croydon and we are having to work very hard to keep them in Croydon.”
In August 2014 the government held a “technical consultation on planning” which allows for the extension until 2019 of the “freedom” to turn offices into flats, with the option for “indefinitely”. This time industrial and warehouse sites are included. Most of the proposals to enable changes of use without needing planning consent will be incorporated in secondary planning legislation over the next few months.
The London Forum of Amenity and Civic Societies summed it up: “These proposals are not a change in policy – if they were we could debate the merits – but are handing the future of our community over to the market to develop as it pleases.”
The situation is untenable. Put simply, current trends in housing and planning deregulation are an attack on society. It is of course leading to homelessness. The number of rough sleepers on the street has doubled since Boris Johnson became mayor, with over half of rough sleepers now being non-UK nationals.
Most homelessness is not so visible. It is not on the street but in hostels and temporary accommodation. London now accounts for 75 per cent of all households in temporary accommodation in England.
But homelessness is not the only problem. As it stands now many of London’s workforce cannot afford to live in the city and have to commute to London at great cost to their personal time and pocket.
The housing crisis is increasingly becoming a crisis of social systems of the city – the systems required for civic society. Ancient civilisations and ancient cities have collapsed in the past. The working class in London and beyond knows what is going on and has a stark choice: fight back or bury their heads in the London clay.
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